September 20, 2014

Understand the costs in breaking a rent lease

A lease

Rents in metropolitan Perth climbed further in the three months to July, up by $10 per week from the June quarter to a median of $440 per week currently.

REIWA data show this breaks down to a median of $450 per week for a house and $420 per week for a unit or apartment.

Our data also show that the vacancy rate across Perth remains tight at 1.9 per cent, due largely to population growth and limited housing stock.

The preferred equilibrium for vacancy rates across Perth is 3 per cent, so the current rate of just under 2 per cent is a third below where it would normally be.

Our figures show there were 2,440 metropolitan rental properties on the market recently, down from 3,708 properties listed during the first week of July last year.

As the number of rental properties diminish, rents are being pushed up. It’s a classic case of supply and demand being driven by population growth and weak investor activity.

As rents climb a higher than usual number of people are breaking their lease to exit a property.

Some single people are breaking their lease on a one bedroom flat to move into a more affordable situation of two bedrooms, a flat mate and shared costs.

Occasionally a FIFO worker lands a job up north or gets relocated and needs to end his lease.

Some younger renters are returning to the family home to live with mum and dad, and more commonly a couple decide to buy a home and leave the rental system altogether now that a mortgage is not greatly different to many asking rents.

These outcomes are understandable and REIWA property managers are experiencing an increase in the number of enquiries from both tenants and property owners asking about the costs involved in breaking a lease.

Tenants need to understand that a lease is essentially a contract between two parties and leaving the premises before the agreed termination date is a breach of that contract.

Under the Residential Tenancies Act, the owner is entitled to be ‘no worse off’ as a result of any breach by the tenant. As such, they can claim from the tenant any costs, such as rent until the premises are re-let, the costs for advertising for a new tenant and any unused portion of the letting fee.

It is important therefore, that if a tenant is thinking of breaking their lease for whatever reason, that they talk to the property manager about the potential cost of that so they can make a considered decision about the best time to move and how that might impact on their budget.

This article was originally posted on

Image by Nobmouse via Flickr.

About David Airey

David has been selling real estate in the Western Suburbs for over 3 decades. He is a licensed real estate agent and auctioneer. David was President of the Real Estate Institute of Australia from 2009 to 2011. He is now President of REIWA after being elected in 2011.


  1. What is the motive behind costs in breaking a rent lease? I want to know about it.